Food delivery player DoorDash stock (NYSE: DASH
DASH
We have reduced our price estimate for DASH stock to about $60 per share, from a previous estimate of $100 per share, due to a couple of factors. Firstly, there are concerns that the U.S. could be headed into a recession and this could impact DoorDash given that delivery demand is largely levered toward discretionary spending. Moreover, profitability also remains elusive for the company, despite its rising delivery volumes and revenues. Adjusted gross margins have trended steadily lower falling from about 56% roughly to 47% in Q3 2022. This could mean that DoorDash will take some time to turn profitable. That said, we remain positive on the stock, with our price estimate standing at about 25% ahead of the current market price. DoorDash trades at under 3x projected 2022 revenues, which is well below the 16x forward revenue multiples the stock traded at in 2021. DoorDash is looking to move into delivering more lucrative products such as alcohol and non-perishable goods, while also expanding its international footprint. See our analysis DoorDash Valuation: Expensive Or Cheap? for more details on DoorDash’s valuation. See our dashboard on DoorDash Revenue for an overview of DoorDash’s business model and how its revenues are likely to trend.
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